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THE  AMBM-ICAN 

REVIEW 
REVIEWS 


m^ 


33  CIIIr^TI 


REEK  DISASTER  AND  EUROPEAN  DISCORD 

By  FRANK  H.  SIMONDS 

FENSE  OF  THE  FORDNEY-McGUMBER  TARIFF 

By  EDWARD  NELSON  DJNGLEY 

OUR  EXPERIMENT  IN  NICARAGUA 

By  CHARLES  E.  CHAPMAN 

ITALY'S  POLITICAL  CRISIS 

By  LEONARDO  VITETTI 


WOMEN  LEADERS  OF  MODERN  EGYPT 

By  GRACE  THOMPSON  SETON 


LUTES    FOR  ANTHRACITE 

By  GEORGE   H.  GUSHING 


COLORADO'S  GREAT  TUNNEL 

By  WAYNE  C.  WILLIAMS 


TWENTY  YEARS  OF  LA  FOLLETTE 


I 


Many  other  current  topics  in  editorials,  leading  articles,  pictures  and  cartoons 


'"^g^y^^rnP 


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Are  You  Going  Abroad? 


IF  YOU  are  planning  a  trip  to  Europe, 
send  the  information  blank  below  to 
your  Government.  Send  it  now,  no  matter 
when  you  intend  to  go,  and  learn  about 
the  great  American  ships — your  ships — 
which  now  will  take  you  there. 

You  will  be  proud  of  this  splendid  fleet 
that  is  operated  by  the  United  States  Lines. 
The  George  Washington,  the  America, 
and  other  ships  of  the  line  are  among  the 
finest  afloat.  Every  detail  of  their  luxuri- 
ous appointments  displays  faultless  taste. 
The  most  fastidious  demands  of  the  sea- 
soned traveler  are  everywhere  anticipated. 
The  staterooms  are  unusually  spacious  and 
ultra-modernly  equipped.  The  public 
rooms  ofl^er  every  facility  for  diversion. 
The  food  is  prepared  by  chefs  of  proven 
ability.     Only  the  best  is  served. 

Send  in  the  information  blank  today. 
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INFORMATION  BLANK 

To  U.  S.  Shipping  Board  ' 

Information  Section         Wasliington,  Dj.  C. 
U.  S. B    1827 


Please  send  without  obligation  the  U.  S.  Governl-nent 
Booklet  giving:  travel  facts  and  also  information  regaj-din? 
the  U.  S.  Government  ships.  1  am  considering  a  tiip  to 
Europe  D  to  The  Orient  D  to  South  America  Cl, 

If  I  go  date  will  be  about 


Mj  'Same 

Lusiness  or  Profession 

Mj  Street  No.  or  R.  F.  D. 
Town 


V^ 


y 


UNITED  STATES  SHIPPING  BOA 


Information  Section  B 


Washington, 


The  American  Review  of  Reviews 


EDITED    BY  ALBERT   SHAW 


CONTENTS     FOR    OCTOBER,     1922 


vr^.Lxvi 


Yvd) 


Mrs.  Warren  G.  Harding 

The  Progress  of  the  World- 
Republican  Prestige  on  the  Wane.  . 

Party  Loyalty  Desirable 

Shall  We  Have  Another  Deadlock? 

A  Badly  Staged  Tariff  Measure 

Politics  in  Making  Tariffs. 


■  ■  ■   339 

■  339 

■  339 

■  339 
•  340 

The  Final  Bill  as  Reported 340 

The  Embargo  on  Dye-stuffs 340 

The  Question  of  Potash 341 

Mr.  Fordney  Accepts  the  Verdict 341 

An  Expert's  Defense  of  Fordney 342 

Both  Parties  for  High  Duties 342 

American  Markets  Eagerly  Sought 342 

How  Tariffs  Affect  Prices 343 

The  New  Tariff  is  a  Business  Fact 343 

National,  Not  Sectional 344 

Next,  the  Bonus  Bill 344 

How  the  Senators  Divided 344 

Mr.  Harding  the  Final  Umpire 345 

Financial  Aspects  of  the  Bonus 345 

The  President  Under  Criticism 346 

No  Personal  Ruler  Needed 346 

The  Public  Must  Be  Aroused 346 

Mr.  Harding  and  His  Party  at  the  Polls.  .  .  .  347 

Bossism  No  Longer  Controls 348 

The  Maine  Elections 348 

La  Follette  and  Wisconsin  Primaries 349 

Michigan  and  the  Newberry  Issue 349 

California  and  Hiram  Johnson 350 

From  Puget  Sound  to  Cape  Cod 350 

Maryland  Takes  the  Primaries  Serioush".  . .  .  350 

Hard  wick  and  Blease  Defeated 351 

"Run-offs"  in  Texas  and  Mississippi 351 

State  and  Local  Activity 352 

The  CoalMiners  Return  to  Worl: 353 

The  Anthracite  Agreement  Later 353 

British  Coal  Helps  Out 353 

The  President's  Unavailing  Efforts 354 

The  Railroad  Strike. 355 

A  Poorly  Managed  Episode 355 

Incomes  and  Profits  Fall  Off 356 

The  Rates  Are  Too  High 356 

Ships  at  Wholesale 356 

Supporting  Our  Merchant  Marine. 357 

America  in  East  and  West 357 

Ireland's  Griefs  and  Hopes 358 

Recovery  Proceeds  in  Europe 358 

Opening  the  Public  Schools 359 

Pursuit  of  Higher  Education 360 

Phi  Beta  Kappa  Becomes  Active 360 

With  portraits,  cartoons,  and  other  illustrations 

Record  of  Current  Events 361 

With  illustrations 

American  Problems — in  Cartoons 365 

Investment  Questions  and  Answers, 


371 


380 


Frontispiece      Greek  Defeat  and  European  Discord. . 
By  Frank  H.  Simonds 
The  Women  Leaders  of  Modern  Egypt. 

By  Grace  Thompson  Seton 

With  portraits 

A  Tariff  to  Raise  Revenue  and  Reduce 

Unemployment 387 

By  Edward  Nelson  Dingley 

Substitutes  for  Anthracite 395 

By  George  H.  Gushing 

Twenty  Years  of  La  Follette 398 

By  an  Onlooker 

With  portrait 

Colorado's  Great  Tunnel ' 401 

By  Wayne  C.  Williams 

With  portrait  and  other  illustrations 


An  American  Experiment  in  Nicaragua .  405 

By  Charles  E.  Chapman 

With  portrait  and  other  illustrations 

Brazil  in  Pictures 411 

Italy's  Political  Crisis 417 

By  Leonardo  Vitetti 

With  portraits 

Efficiency  in  State  and  Local  Govern- 
ment   421 

By  Marjorie  Shuler 

Leading  Articles  of  the  Month — 

The  Victorious  Turk 422 

Germany  and  the  League  of  Nations 424 

Industrial  Courts 425 

Chicago's  Clearing  House  for  Freight 427 

Doing  Business  by  the  Weather 428 

"Game"  as  an  Economic  Asset 429 

Oral  Funeral  Rites  in  Ireland  and  Elsewhere  .  43 1 

Assimilation  of  Foreigners  in  France 433 

Italy  Misunderstood  by  the  French 434 

French  Railroads  and  the  Eight-Hour  Law. .  .  435 

An  Extreme  German  View 436 

Pan-Germanist  Propaganda 437 

King  Constantine's  Return  to  Greece 439 

Narcotic  Dreams  and  Their  Aftermath 440 

Forest  Fire  Losses  of  1922 441 

Instinctive  Habits  of  Spiders 442 

The  British  Farmer 443 

News  of  Nature's  World 444 

With  portraits,  cartoons,  and  other  illustrations 

The  New  Books , 446 

Page  6,  advertising  section 


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THE  REVIEW  OF  REVIEWS  CO.,  30  Irving  Place,  Nev^^  York 

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Albert  Shaw,  Pres.     Chas.  I>.  Lanier,  Sec.  and  Treas. 


337 


Bachrach 

MRS.  HARDING,  WHOSE  ILLNESS  AROUSED  THE  NATION'S   SYMPATHY 

(It  was  announced  on  September  8  that  the  wife  of  the  President  had  been  taken  seri- 
ously ill,  and  for  several  days  the  bulletins  were  far  from  encouraging.  After  a  week,  however, 
came  the  cheering  news  that  the  invalid  was  out  of  danger.  Our  Presidents  have  generally 
been  fortunate  in  the  support  and  co-operation  of  wives  who  have  gained  the  affectionate 
esteem  of  the  country  by  reason  of  their  display  of  the  best  qualities  of  American  woman- 
hood. No  President,  it  may  be  said,  has  been  more  fortunate  than  Mr.  Harding  in  having 
the  constant  support  and  aid  of  a  wife  who  has  not  only  exceptional  fitness  for  the  social 
duties  of  her  place  as  mistress  of  the  White  House,  but  who  has  a  talent  for  affairs  and  is 
an  adviser  of  calm  judgment  and  rare  wisdom.  She  was  Miss  Florence  Kling,  of  Marion, 
Ohio,  and  was  married  to  Mr.  Harding  July  8,  1891,  The  future  President  had  gone  to 
Marion  and  engaged  in  newspaper  work  at  the  age  of  nineteen  or  twenty,  and  he  was  not 
yet  twenty-six  when  he  married  Miss  Kling) 


338 


AN  AMERICAN  EXPERIMENT 
IN  NICARi^GUA 

BancroWibr^  CHARLES  E^^HAPMAN  '^^^'^ 

(Associate  Professor  of  Hispanic  American  History  in  the  University  of  California) 


IN  his  pre-election  campaign  in  191 2 
Woodrow  Wilson  denounced  President 
Taft's  intervention  in  Nicaragua  as  an  un- 
justifiable act  of  imperialism.  That,  no 
doubt,  represented  the  honest  opinion  not 
only  of  Mr.  Wilson  but  also  of  thousands 
of  thinking  people  in  the  United  States.  It 
was  a  natural  supposition  that  the  company 
of  Marines  sent  to  Managua,  the  capital  of 
Nicaragua,  by  President  Taft  would  at  once 
be  withdrawn  following  the  inauguration  of 
President  Wilson.  But  the  Marines  stayed. 
And  they  are  there  yet.  Furthermore,  Pres- 
ident Wilson  began  a  series^  of  interventions 
in  other  American  countries  that  surpassed 
the  combined  efforts  of  his  predecessors  of 
more  than  half  a  centur^^  In  Mexico,  Vera 
Cruz  was  occupied,  and  later  Pershing  was 
sent  on  a  wild-goose  chase  after  Pancho 
Villa.  Cuba  and  Panama  were  forbidden  to 
indulge  in  the  local  sport  of  revolution  as  a 
means  of  choosing  a  President.  And  Haiti 
and  Santo  Domingo  were  effectually  occu- 
pied by  armed  forces  of  the  United  States 
which  still  control  the  destinies  of  those 
island  republics.  An  ac- 
count of  the  American 
intervention  in  both  coun- 
tries appeared  in  the  July 
number  of  this  Review. 
A  report  by  Dr.  Carl  Kel- 
sey,  of  the  University  of 
Pennsylvania,  gives  full 
details  of  our  occupation 
of  the  island. 

Clearly  some  explana- 
tion of  these  acts  should 
be  forthcoming.  At  first 
sight,  one  might  otherwise 
be  pardoned  for  believing 
that  the  apostle  of  "self- 
determination  of  peoples" 
was  in  fact  as  great  a 
"hypocrite"  as  he  has 
been  charged  with  being 
by  certain  Spanish-Ameri- 


can  writers.  The  truth  seems  to  be  that 
Mr.  Wilson  did  not  fully  understand  the 
situation  before  he  came  into  office.  After- 
ward, he  became  at  least  partially  in- 
formed, realizing  the  unavoidable  necessity 
of  some  action  in  the  nearer  republics  of 
Hispanic  America.  He  may  be  criticized 
for  the  ways  in  which  he  carried  out  his 
numerous  interventions,  but  not  for  the 
facts  of  the  interventions  themselves.  It 
is  the  purpose  of  this  article  to  give  a 
rapid  survey  of  one  such  intervention- 
begun,  indeed,  by  President  Taft — an  inter- 
vention which,  on  the  whole,  reflects  credit 
on  the  American  people. 

TJie  Interests  of  Europe 

The  five  republics  of  Central  America,  of 
which  Nicaragua  is  one,  have  been  the  scene 
of  probably  more  revolutions  in  the  past 
hundred  years  than  any  other  region  of 
equal  area  in  the  world.  If  the  Central 
American  countries  alone  were  to  be  con- 
sidered, one  might  indeed  keep  "hands  off," 
and  let  them  "stew  in  their  own  juice." 


THE    REPUBLIC   OF   NICARAGUA   IN   ITS    RELATION  TO   OTHER 
CENTRAL  AMERICAN   COUNTRIES 

40s 


4o6 


THE  AMERICAN  REVIEW  OF  REVIEWS 


So,  too,  might  the  United  States  forego  the 
undoubted  rights  in  international  law  of  her 
own  citizens  to  protection  of  life  and  prop- 
erty in  their  legitimate  dealings  with  those 
republics.  But  there  is  a  third  element 
which  cannot  thus  easily  be  put  off — the 
interests  of  Europeans. 

European  nations  have  been  unwilling  to 
*'tum  the  other  cheek"  or  "bare  the  solar- 
plexus"  for  the  blows  which  Central  Ameri- 
can revolution  and  bankruptcy  would  rain 
upon  them.  England,  in  particular,  has  in- 
sisted that  the  rights  of  her  nationals  be 
protected,  including  payment  of  debts  owing 
to  them.  Carried  to  a  logical  conclusion — 
as  they  have  been  in  every  continent  of  the 
world  except  the  two  Americas! — the  de- 
mands of  European  Powers  would  long  ago 
have  resulted  in  annexations  or  protec- 
torates in  the  greater  part  of  Hispanic 
America,  if  it  had  not  been  for  the  Monroe 
Doctrine.  Under  the  circumstances,  Euro- 
pean "diplomatic  pressure"  in  Central 
America  has  not  always  been  effectual. 
Therefore,  Europe  has  gone  to  Washington, 
and  said:  "If  you  are  unwilling  tohave  us 
go  into  these  countries,  see  to  it  yourself 
that  our  rights  are  protected."  Obviously, 
the  United  States  has  been  obliged  to  do 
one  of  two  things:  intervene,  or  abandon 
the  Monroe  Doctrine.  No  American  Presi- 
dent has  as  yet  consented  to  drop  the 
famous  principles  enunciated  in  1823. 
Therefore,  there  has  been  intervention — of 
a  sort,  usually  half-hearted,  ill-informed, 
badly  managed.  Among  all  such  interven- 
tions in  recent  years  that  in  Nicaragua 
stands  out  like  a  luminary  in  the  heavens 
as  one  that  has  been  a  success — in  spite  of 
misunderstanding  at  our  national  Capital 
that  at  times  threatened  to  kill  it.   ~ 

Revolution  and  an  Empty  Treasury 

In  1893  General  Jose  Santos  Zelaya  came 
into  power  in  Nicaragua  as  the  result  of  a 
successful  revolution.  From  that  time  for- 
ward, for  sixteen  years,  he  ruled  Nicaragua 
as  his  own  interests  and  caprice  dictated. 
He  robbed  and  murdered.  He  desecrated 
homes.  He  rode  roughshod  over  foreign 
interests,  so  that  it  was  impossible  to  have 
any  dealings  with  him. 

In  1909  a  revolution  against  Zelaya  broke 
out  in  Bluefields.  Early  in  the  campaign 
two  Americans,  Groce  and  Cannon,  who 
were  fighting  on  the  revolutionary  side,  were 
captured  by  Zelaya  and  brutally  put  to 
death.    This  incident,  of  no  [;reat  impor- 


tance in  itself,  seems  to  have  determined 
President  Taft  to  get  rid  of  Zelaya.  So 
when  the  latter's  troops  approached  Blue- 
fields,  which  is  in  fact  a  center  of  foreign 
interests  along  the  Atlantic  coast,  the 
United  States  Government  forbade  them  to 
bombard  the  town.  Consequently,  Zelaya 
w^as  unable  to  take  Bluefields.  This  proved 
to  be  the  decisive  factor  of  the  war,  which 
shortly  afterward  resulted  in  victory  for 
the  revolutionary  party.  Zelaya  himself 
got  safely  away  to  Europe,  there  to  enjoy 
the  loot  which  sixteen  years  of  unbridled 
rule  in  Nicaragua  had  given  him. 

The  American  Collector  of  Customs 

The  situation  which  the  new  government 
faced  was  chaotic  in  the  extreme.  The 
Nicaraguan  peso  had  declined  from  a  nor- 
mal value  of  fifty  cents  to  ten,  and  two  years, 
later  fell  to  five.  The  treasury  was  empty, 
and  it  became  necessary  to  default  on  the 
country's  bonds.  In  this  situation  the  Nica- 
raguan Government  in  19 10  appealed  to  the 
United  States  for  help.  The  State  Depart- 
ment responded  with  much  friendly  assis- 
tance, and  was  the  means  of  arranging  for  a 
loan  from  two  New  York  banking  houses. 
Brown  Brothers  &  Company  and  J.  and  W. 
Seligman  &  Company.  A  treaty  negotiated 
between  the  United  States  and  Nicaragua 
provided  for  the  appointment  of  a  Collector 
General  of  Customs  approved  by  the  Presi- 
dent of  the  United  States.  This  was  in- 
tended to  restore  a  sound  financial  condition 
in  Nicaragua.  The  treaty  failed  in  the 
United  States  Senate,  but  through  the  aid 
of  the  New  York  bankers,  under  the  aus- 
pices of  the  State  Department,  the  main 
idea  was  nevertheless  carried  out. 

Ten  years  have  passed  since  the  American 
intervention  got  fairly  under  way  in  191 2. 
If  an  attempt  had  been  made  to  pick  the 
very  worst  time  in  the  history  of  Nicaragua 
for  the  experiment,  this  decade  might  well 
have  been  chosen.  Right  at  the  outset,  in 
191 2,  there  was  a  serious  revolution,  headed 
by  General  Mena,  the  powerful  Minister  of 
War.  The  State  Department  had  gone  too 
far  to  draw  back  now,  and,  at  the  request 
of  the  Nicaraguan  Government,  sent  in  a 
body  of  Marines  to  protect  foreign  interests. 
In  effect  this  caused  the  failure  of  the  revo- 
lution. It  was  clear  that  another  would 
break  out  as  soon  as  the  Marines  were  with- 
drawn; so  the  government  of  Nicaragua  v 
asked  that  they  should  remain  at  Managua.  ), 
This  they  did,  and  at  the  express  and  re- 


I 


AN  AMERICAN  EXPERIMENT  IN  NICARAGUA 


4C7 


iterated  wish  of  the  Nicaraguan  authorities 
they  have  remained  ever  since. 

The  treaty  of  191 1  had  provided  for  a 
loan  from  the  New  York  bankers  of  $15,- 
000,000,  most  of  which  was  intended  to  be 
appUed  in  refunding  the  national  debt,  and 
in  settlement  of  claims.  The  establishment 
of  a  National  Bank,  stabilization  of  the 
currency,  and  build- 


This  was  a  grave  setback,  but  the  Nicara- 
guan Government  went  ahead  as  best  it 
could.  The  State  Department  persuaded 
the  New  York  bankers  to  lend  $1,500,000 
for  the  establishment  of  a  National  Bank 
and  stabilization  of  Nicaraguan  currency  on 
a  par  with  the  dollar.  A  Mixed  Claims 
Commission  was  established,  two  of  whose 
three  members  were 


ing  of  a  railroad  to 
the  Atlantic  coast 
were  other  features. 
Security  for  pay- 
ments of  interest 
and  for  the  eventual 
repayment  of  the 
loan  was  based  pri- 
marily on  the  Cus- 
toms Revenues,  and 
the  control  of  the 
National  Bank  by 
the  New  York  bank- 
ers. At  the  sug- 
gestion of  the  State 
Department,  Colonel 
Clifford  D,  Ham  was 
appointed  Collector 
General  of  Customs. 
Colonel  Ham  came 
to  this  post  after  a 
long  experience  in 
the  Philippines, 
through  which  he 
learned  not  only 
how  to  handle  cus- 
toms revenues  but 
also — and  this  was 
more  important — 
how  to  deal  with  a 
Spanish  civilization. 
He  took  charge  in  December,  191 1,  and  is 
still  in  ofhce. 

When  Nicaragua  Faced  Bankruptcy 

But,  as  already  stated,  the  United  States 
Senate  failed  to  ratify  the  treaty,  and  the 
loan  was  not  made.  The  result  to  Nicaragua 
is  summed  up  by  Colonel  Ham  as  follows: 

The  failure  of  the  treaty  delayed  the  reforms  for 
seven  years,  all  except  the  new  currency  system, 
and  the  railroad  has  not  been  built  yet.  If  the 
Senate  had  ratified  the  treaty,  the  Revolution  of 
191 2  might  not  have  happened  (it  cost  Nicaragua 
a  couple  of  millions  more),  the  creditors  and  claim- 
ants could  have  gotten  better  terms,  and  a  settle- 
ment in  191 2  and  1913  instead  of  1917-1918,  and 
the  railroad  would  probably  have  been  built  before 
now.  The  financial  difficulties  of  the  years  1913  to 
191 7  would  probably  not  have  happened.  The 
Senate  cost  Nicaragua  dearly. 


©  Harris  &  Ewing 

HON.    CLIFFORD   D 


(Who  has   been   Collector-General   of  Customs   for   the 

Republic  of  Nicaragua  since  1911.      Previously  Colonel 

Ham  had  performed  similar  work  in  the  Philippines,  after 

service  in  the  Spanish- American  War) 


appointed  by  the 
American  Secretary 
of  State.  This  body 
worked  from  191 1 
to  1 9 14,  passing  on 
nearly  8,000  claims, 
reducing  them  in 
amount  from  $13,- 
800,000  to  $1,800,- 
000.  Only  the  small- 
est claims  could  be 
paid  at  the  time, 
however,  owing  to 
lack  of  funds. 

In  191 2  occurred 
the  already  -  men- 
tioned Mena  revolu- 
tion, adding  to  the 
financial  embarrass- 
ments of  the  coun- 
try. In  1 9 13  En- 
gland, France,  Italy, 
and  especially  Ger- 
many, made  strong 
representations  both 
at  Managua  and 
Washington  in  favor 
of  debts  owing  their 
nationals.  By  this 
time  the  Wilson  Ad- 
ministration  had 
come  into  power,  and  it  began  to  see  matters 
in  a  different  light  from  that  of  preelection 
days.  European  diplomats  were  informed 
that  the  United  States  would  take  a  friendly 
interest  in  their  claims.  The  Great  War, 
breaking  out  in  19 14,  postponed  political 
pressure,  but  nearly  ruined  Nicaragua  finan- 
cially. That  country  had  depended  primarily 
for  its  revenues  on  its  shipments  of  coffee  to 
Europe.  This  source  of  income  now  failed. 
Only  the  consent  of  the  American  and  En- 
glish creditors  to  a  suspension  of  interest  and 
sinking-fund  payments  on  their  bonds  car- 
ried the  government  over  the  next  three 
years.  Even  so,  teachers  and  many  other 
employees  of  the  government — always  ex- 
cepting the  army  and  the  police! — had  to 
go  for  months  at  a  time  without  pay. 


HAM,    OF   IOWA 


4o8 


THE  AMERICAN  REVIEW  OF  REVIEWS 


Various  expedients  were  tried  to  relieve 
the  situation.  One  of  these  was  the  sale  of 
51  per  cent,  of  the  stock  of  the  Pacific  Rail- 
road to  the  bankers  for  $1,000,000.  Of  far 
greater  importance  was  the  Chamorro- 
Br>an  Treaty  of  August  5,  19 14,  negotiated 
before  the  outbreak  of  the  Great  War,  but 
not  ratified  until  considerably  later.  The 
principal  feature  of  this  treaty  was  the  pur- 
chase by  the  United  States  from  Nicaragua, 
for  $3,000,000,  of  an  option  for  the  United 
States  to  build  a  canal  through  Nicaragua. 
An  attempt  by  the  German  Government  to 
acquire  rights  along  the  canal  route  was  one 
of  the  hastening  factors  in  the  negotiation 
of  this  treaty.  But  the  Senate  held  up  the 
treaty  until  June,  1916,  Congress  failed  to 
appropriate  funds  until  some  months  later, 
and  the  money  was  not  available  until 
July,  1917. 

How  the  Problem  Was  Solved 

In  19 1 6  and  early  in  191 7  matters  were 
at  their  worst.  Everybody  was  dissatisfied. 
The  American  intervention  up  to  this  point 
seemed  decidedly  to  have  been  a  failure.  It 
was  just  at  this  time  that  a  brilliant  scheme 
was  devised  which  saved  the  situation  and 
put  Nicaragua  on  her  feet.  Many  persons 
contributed  to  the  result,  but  there  were  sev- 
eral who  seem  entitled  to  special  credit.  It 
was  the  Collector  General,  Colonel  Ham, 
who  suggested  the  basic  idea  of  the  now 
famous  Plan  of  191 7 — that  of  a  financial 
reorganization  and  readjustment  of  the  na- 
tional debt.  But  General  Emiliano  Cha- 
morro  (President  from  1917  to  1921  and 
now  Minister  to  Washington),  Martin 
Benard  (Minister  of  Finance),  and  the  of- 
ficers of  the  bank  had  much  to  do  with  work- 
ing out  the  details.  The  project  was  so 
unusual  that  on  one  occasion  General  Cha- 
morro  pointed  to  a  chandelier  and  said  he 
would  hang  himself  from  it  before  he  would 
accept  the  Plan.  Further  study  convinced 
him  of  its  merit,  and  events  have  amply 
proved  his  latter  judgment  right. 

The  Plan  of  191 7  left  the  bonded  foreign 
debt  intact,  but  provided  for  the  payment 
of  all  floating  foreign  and  internal  debts 
and  claims  in  a  reduced  amount  of  cash 
and  domestic  lx)nds.  The  future  finances 
of  the  countr>'  were  taken  into  account 
through  the  adoption  of  a  budget  system 
and  the  establishment  of  a  certain  measure 
of  control  by  the  United  States  Govern- 
ment. The  last-named  object  was  attained 
through  the  founding  of  a  High  Commission, 


one  of  whose  members  was  to  be  a  Nicara- 
guan  and  the  other  an  American,  appointed 
by  the  American  Secretary  of  State.  In- 
case of  disagreement,  a  decision  was  to  be 
rendered  by  a  third  member,  also  an  Amer- 
ican. The  budget  stipulated  a  certain  sum 
that  the  government  could  spend  each 
month.  Beyond  that  amount  its  expendi- 
tures must,  in  the  main,  receive  the  approval 
of  the  High  Commission.  Other  features  of 
the  Plan  provided  funds  for  payments  of 
interest  and  the  amortization  of  the  do- 
mestic debt,  which  w^as  to  be  administered 
by  the  High  Commission.  The  whole  ar- 
rangement was  approved  not  only  by 
Nicaragua  but  also  by  the  bankers  and  the 
State  Department  of  the  United  States. 

Excellent  results  were  obtained  almost  at 
once.  The  creditors  accepted  the  Plan,  and 
have  since  received  interest  regularly  on 
their  bonds.  These  securities,  known  as 
Guaranteed  Customs  Bonds  (since  they  are 
secured  in  part  by  a  percentage  of  the  cus- 
toms revenues)  are  now  in  such  favor  that 
they  are  being  sought  abroad  for  invest- 
ment; in  191 8  considerably  over  half  were 
owned  in  Nicaragua,  while  now  two-thirds 
are  held  by  foreigners.  The  arrears  in  in- 
terest on  the  foreign  bonded  debt  have  been 
paid,  and  the  principal  reduced  in  amount. 
And  the  credit  of  the  country  was  so  greatly 
improved  that  it  was  able  to  negotiate 
a  fresh  loan  in  1920,  with  the  idea  of  re- 
purchasing the  51  per  cent,  of  stock  out- 
standing of  the  Pacific  Railroad  and  of 
constructing  another  road  to  the  Atlantic 
coast.  The  first  of  these  objects  has  since 
been  accomplished,  though  the  manage- 
ment of  the  line  is  still  retained  by  the 
bankers  as  part  of  their  security. 

Some  Complaints  that  Persist 

Nicaragua  is  not  yet  wholly  "out  of  the  . 
woods"  economically,  but  this  is  chargeable  ^ 
rather  to  bad  luck  than  to  any  fault  in  the    • 
system.     She  could  not  escape  the  world  de- 
pression, though  its  effects. were  not  felt 
until  192 1.     In  that  year,  also,  heavy  rains 
at  the  wrong  time  ruined  the  coffee  crop,  re- 
sulting in  an  assured  continuance  of  the 
depression  through  1922.     So  there  is  still 
some  dissatisfaction.     People  are  prone  to 
interpret  the  financial  system  in  terms  of 
their  personal  good  or  bad  fortune.     In  par- 
ticular one  hears  a  perfect  din  of  complaints 
against  "the  Bank."     The  writer  made  an\ 
attempt  to  inquire  into  the  precise  charges,  '1 
but,  without  hearing  that  institution's  side 


I 


AN  AMERICAN  EXPERIMENT  IN  NICARAGUA 


409 


of  the  case,  has  concluded  from  the  argu- 
ments of  its  enemies  that  it  is  desendng  of 
praise  rather  than  censure.  The  complaints 
— made  with  fervent  sincerity! — are  in  no 
respect  different  from  those  of  cheap-money 
advocates  in  all  eras  of  depression  every- 
where. Many  of  the  charges  do  not  merit 
serious  consideration — such,  for  example,  as 
that  of  an  iniquitous  plot  to  lower  the  price 
of  coffee. 

Indeed,  the  only  concrete  thing  alleged  is 
that  the  bank  would  not  lend  money  to 
those  who  needed  it,  and,  through  its 
monopoly  of  the  right  of  issue,  would  not 
put  more  money  into  circulation;  hence  the 
denunciations  on  the  part  of  those  who  could 
have  saved  themselves  through  the  medium 
of  a  loan — which,  incidentally,  they  could 
not  get,  either,  from  the  English  banks. 

The  country  most  assuredly  is  better  off 
as  a  result  of  the  bank's  sound  policy,  even 
if  individuals  lost.  The  man  in  the  street 
will,  of  course,  never  recognize  this.  Thus 
'Hhe  Bank"  in  Nicaragua  is  the  same  sort 
of  opprobrious  epithet  as  is  ''Wall  Street" 
in  the  United  States.  Many  excellent  men 
there,  as  here,  join  in  the  clamor,  and  few 
rise  to  defend  what  is,  after  all,  one  of  the 
most  beneficent  institutions  in  the  country. 

What  Nicaragua  Has  Gained  Through 
American  Intervention 

At  this  point  it  may  be  well  to  sum  up 
some  of  the  economic  advantages  thus  far 
derived  from  the  American  intervention. 
Nicaragua  has  been  made  solvent,  and  its 
money  circulates  at  par  with  the  dollar. 
How  many  other  countries  of  the  world  can 
say  as  much?  In  1920  and  192 1  the  mer- 
chants of  Nicaragua,  almost  alone  in  His- 
panic America,  did  not  reject  American 
goods  for  which  they  had  previously  con- 
tracted. There  were,  indeed,  some  read- 
justments on  goods  delivered  after  prices 
had  fallen  from  those  of  the  original  con- 
tract, but  the  amounts  involved  were  small, 
and  there  were  no  disputes  over  these  mat- 
ters. In  the  light  of  the  thousands  of  tons 
left  to  rot  and  ruin  on  the  docks  of  Cuba, 
Colombia,  Argentina,  and  almost  every- 
where else,  this  is  a  remarkable  record. 
Circulation,  in  terms  of  gold,  has  increased 
from  an  average  of  about  $1,300,000  prior 
to  1909  to  over  $2,000,000  now.  The 
national  debt  has  been  reduced  from  %^2,- 
^  000,000  in  191 1  to  less  than  $10,000,000  at 
the  present  time.  And  Nicaragua,  though 
desperately  poor   for  the   moment,   is   in 


a  position  to  profit  by  the  first  revival  of 
prosperity.  Indeed,  few  countries  of  the 
world  are  in  a  fundamentally  more  sound 
financial  condition  than  is  Nicaragua. 

Coffee,  bananas  and  sugar  comprise  more 
than  half  of  the  exports  of  Nicaragua, 
while  cotton  goods,  flour,  iron  and  steel 
manufactures,  petroleum,  and  chemicals 
constitute  nearly  half  of  the  imports.  In 
192 1  the  country  bought  goods  abroad  to 
the  value  of  $5,310,000  and  sold  abroad  to 
the  extent  of  $8,071,000.  Trade  with  the 
United  States,  both  imports  and  exports, 
accounted  for  $10,000,000  out  of  a  total 
foreign  commerce  valued  at  $13,381,000  in 
192 1.  Nicaragua's  foreign  trade,  it  should 
be  noted,  was  from  two  to  three  times  as 
large  in  1920  as  in  any  year  prior  to  the 
coming  of  the  American  financial  advisers. 

Politics  aftd  Parties 

It  is  possible  that  the  political  advantages 
of  the  American  intervention  even  outweigh 
the  economic.  To  make  this  clear,  a  brief 
review  of  events  is  necessary.  At  the  outset 
the  Liberal  party,  which  has  been  out  of 
power  since  the  overthrow  of  Zelaya,  was 
opposed  to  ever)^  phase  of  the  "Ameri- 
canismo."  They  made  the  fullest  use  of 
their  opportunity  to  cry  out  patriotism  as 
against  the  foreigner. 

With  the  vocal  advantage  of  the  party  out 
of  power,  the  Liberals  have  persuaded  both 
themselves  and  several:  foreign  writers  that 
they  have  an  overwhelming  majority  in 
Nicaragua,  and  are  only  prevented  from 
acquiring  control  of  the  government  because 
of  the  support  given  the  Conservative 
party  by  the  United  States.  As  to  the  first 
of  these  assertions,  the  writer  is  convinced 
that  one  would  be  very  rash  to  claim  a  ma- 
jority for  either  party.  The  sanitary  census 
of  the  admittedly  unbiased  International 
Health  Board,  to  say  nothing  of  the  national 
census  of  1920,  is  a  strong  argument  in  favor 
of  the  Conservative  contention  as  to  distri- 
bution of  the  population,  and  can  be  set  off 
against  the  ardent  Liberal  insistence  in  their 
own  superior  numbers.  The  matter  has 
never  been  put  to  a  real  test,  however,  for 
it  is  true  that  the  United  States  has  virtually 
backed  the  Conservative  party;  indeed,  our 
Government  has  even  been  obliged  to  take 
an  interest  in  the  selection  of  a  President, 
and  its  wish,  if  clearly  expressed,  would  be 
determining.  To  be  sure,  there  have  been 
a  number  of  elections  in  the  past  ten  years  in 
which  the  Conservatives  have  uniformly  tri- 


4IO 


THE  AMERICAN  REVIEW  OF  REVIEWS 


umphed.  But  there  are  very  few  countries 
in  Hispanic  America  where  the  party  in 
power  ever  loses  an  election! 

Why  has  it  been  necessary  for  the  United 
States  to  favor  one  party  as  against  another? 
Given  the  Liberal  attitude  it  was  impossible 
to  do  anything  else.  Otherwise  there  would 
have  been  a  revival  of  the  familiar  cycle: 
revolution  —  repudiation  —  European  de- 
mands— and  a  fresh  intervention,  or  else  an 
abandonment  of  the  Monroe  Doctrine.  In 
this  connection  the  fact  that  the  State  De- 
partment influenced  the  New  York  bankers 
in  the  making  of  their  financial  arrangements 
with  Nicaragua  cannot  be  overlooked.  The 
situation  has  not  been  a  pleasant  one  for  our 
Government  to  face,  and  there  have  been 
complaints  in  Nicaragua  because  the  State 
Department  has  at  times  endeavored  to 
dodge  its  responsibility.  Thus,  in  the  presi- 
dential election  of  1920,  the  State  Depart- 
ment announced  that  it  would  not  favor  any 
single  candidate  over  another,  and  this  has 
brought  about  something  very  like  a  split  in 
the  Conservative  party.  Nevertheless,  a 
long-continued  intervention  in  the  face  of 
a  hostile  majority,  or  near-majority,  could 
hardly  be  viewed  with  favor  in  the  United 
States.  It  is  therefore  important  to  see 
whether  there  has  been  any  change  in  the 
situation  which  gives  promise  of  freeing 
us  from  our  obligations  in  Nicaragua. 

The  Liberal,  or  Opposition^  Party 

Happily,  it  is  true  that  the  attitude  of  the 
Liberals — ^certainly  that  of  their  leaders — 
has  changed.  There  are  still  some  bitterly 
'* an ti- Americanist"  Liberals  against  the  in- 
tervention on  every  score.  There  are  still 
occasional  attacks  not  only  against  ''the 
Bank"  but  also  against  the  Marines.  Sev- 
eral months  ago  there  was  a  shooting  affray 
between  some  of  the  Marines  and  the  police 
of  Managua.  Thereupon,  the  Liberal  press 
clamored  to  high  Heaven  for  the  removal 
of  this  foreign  host — incidentally,  one 
hundred  and  thirty  men.  Then  came 
rumors  that  Washington  was  considering 
whether  the  Marines  should  not  be  taken 
away  permanently — and,  as  if  touched  by 
a  magic  wand,  the  Liberal  papers  relapsed 
into  silence. 

The  truth  is  that  the  Liberals  are  now 
more  interventionist  than  the  Conservatives 
— at  least,  temporarily.  In  conversation 
they  will  tell  you  that  they  accept  American 
management  of  the  customs  revenues;  in- 
deed, the  efficiency  and  honesty  of  the  cus- 


toms service  is  pretty  well  recognized.  In 
like  manner  they  accept  the  High  Commis- 
sion. They  approve  of  the  presence  of  the 
Marines  as  an  assurance  of  peace.  They 
ask  for  further  intervention  in  the  form  of 
American  control  of  elections.  In  fact,  the 
only  thing  they  clamor  against  is  the  Bank. 
The  writer  is  inclined  to  believe  that  a  year 
of  prosperity  in  1923,  which  now  seems 
probable,  will  somewhat  soften  the  asperity 
of  their  opposition  to  the  Bank.  In  the 
light  of  the  financial  achievements  of  the 
past  ten  years,  the  Bank  would  seem  to  be ' 
a  poor  political  issue.  The  Conservatives' 
might  meet  it  by  claiming  that  financial 
success  was  due  to  them — perhaps  despite 
the  Bank.  The  real  complaint  of  the 
Liberals  is  that  they  do  not  have  a  fair 
chance,  at  present,  to  win  an  election. 
This  they  are  not  likely  to  get  until  they 
drop  their  cry  of  "anti-Americanismo." 
Meanwhile,  a  first  step  has  been  taken  look- 
ing toward  the  solution  of  the  election 
problem.  An  expert  in  political  science. 
Dr.  H.  W.  Dodds  of  New  York,  has  re- 
cently spent  several  months  in  Nicaragua 
working  out  a  just  election  law  and  has 
submitted  his  findings  to  the  government. 

One  may  well  wonder  why  there  has  been 
such  a  change  in  Liberal  opinion.  Two  fac- 
tors are  primarily  responsible:  the  econdinic 
benefit  that  has  come  to  Nicaragua,  despite 
disheartening  handicaps,  though  there  are 
many  who  still  fly  in  the  face  of  facts  and 
deny  any  economic  improvement;  and  the 
growing  confidence  in  the  friendliness  of  the 
United  States,  convincing  all  elements  in 
Nicaragua  that  no  American  conquest  is  in 
contemplation.  This  much  is  surely  a  great 
achievement!  The  United  States  obtains 
the  purely  negative  advantage  of  protection 
of  her  citizens,  and  safeguarding  of  the 
Monroe  Doctrine.  Beyond  this  it  is  plainly 
to  her  interests  not  to  go.  Not  only  is 
a  realization  of  this  dawning  in  Nicaragua, 
but  there  is  also  a  glimmer  of  appreciation  ot 
that  fact  in  the  other  Central  American 
countries.  Guatemala,  Salvador  and  Costa 
Rica  are  just  now  negotiating  loans  that 
must  involve  a  similar  penetration  of  Amer- 
ican interest,  if  the  loans  go  through. 
Eventually,  it  is  to  be  hoped,  it  will  be 
possible  to  bring  about  an  entire  withdrawal 
of  American  control  without  risk  of  revolu- 
tion and  a  total  upsetting  of  political  and 
financial  stability.  The  day  that  the  sever- 
ing of  the  American  connection  shall  come 
depends  upon  the  Nicaraguans  themselves. 


^^^■.-^■^mjm0^ 


Lithomount 

Pamphlet 

Binder 

Gaylord  Bros. 

Makers 
Stockton,  Calif 

P^T-  WN  21.  1908    ' 


i 


■i 


